YMTC targets 60% localization of equipment for fourth plant, aims for 70%

Key Facts

China’s YMTC is targeting a share of at least 60% for locally made equipment in its fourth plant’s purchases, with the aim of raising that share to 70%, according to a Reuters report carried by Investing.com on November 6, 2026. The goal puts the localization of production tools at the heart of the company’s new expansion plan, as it plans to add an advanced facility to its plants in Wuhan. The plant is set to produce NAND memory chips with more than 300 vertically stacked memory-cell layers. Production will focus mainly on storage chips for data centers and AI applications, according to the report. This reflects the plant plan’s link to demand for the storage capacity these applications require, alongside the company’s efforts to build broader domestic manufacturing capabilities.

The plan follows YMTC replacing about half of its equipment with domestic machines since its addition to the U.S. Entity List in December 2022, according to two sources cited by Reuters. The company has also developed methods for stacking memory layers using less advanced tools, in an effort to continue developing products despite restrictions on some technologies. The U.S. Commerce Department added the company to the list in December 2022, imposing licensing requirements on U.S. suppliers seeking to sell it certain technologies. The fourth plant’s target indicates the level of domestic reliance the company seeks to achieve in purchases for the new facility. But the Reuters report also pointed to the Chinese memory sector’s sensitivity to any further tightening of restrictions on lithography equipment.

“Imposing additional restrictions on lithography equipment would be the biggest challenge for Chinese memory companies,” said Ray Wang, a memory and AI supply-chain analyst at SemiAnalysis. He pointed to China’s lag in this part of the supply chain compared with other equipment categories. This challenge highlights the importance of the share of domestic equipment YMTC is targeting, since reaching advanced manufacturing levels depends on the availability of tools across production stages. The company is relying, in turn, on developing stacking technologies that allow it to use less advanced equipment, according to the sources cited by Reuters. The new facility is targeting chips with more than 300 layers, a level above the targets cited for its Korean competitors’ plants in China.

According to Omdia data, YMTC’s share of China’s NAND market rose to 38.5% in the second quarter of 2026, from 28% in 2025, surpassing Samsung to become the country’s largest producer of these chips. This domestic expansion comes as the company competes to increase output and improve its position in the memory market. Globally, its share of the NAND market was about 11.8% in 2025, while UBS forecast it would exceed 14% by early 2027. Reuters reported that the expansion of AI data centers had boosted demand for memory chips, and that Chinese memory companies had begun choosing their customers and setting prices, with prices in some cases surpassing those of their Korean competitors. This commercial demand places the new capacity plans in the context of a market where companies are competing for supplies and customers.

YMTC’s plan is not limited to the fourth plant; sources expect each of its third, fourth and fifth plants to process about 100,000 silicon wafers per month at full operation. Operating all three plants would raise the company’s total manufacturing capacity to more than double its current level, according to Reuters. An earlier Reuters report in April said the third plant in Wuhan was expected to begin operating in late 2026 and reach production capacity of 50,000 wafers per month by 2027. That report said the plant building had been completed and equipment installation had begun. This facility is the nearest-term stage in the expansion path, while the report did not specify when the fourth or fifth plant would begin operating.

The fourth facility is also targeting layer counts above those cited for YMTC’s Korean competitors in China. Samsung is converting its Xi’an plant to produce chips with 286 layers, while SK Hynix is upgrading its Dalian facility to 240 layers or more, compared with 192 layers previously, according to the Reuters report. If the new plant reaches the planned level of more than 300 layers, its targeted chips would exceed the figures cited for the two competing facilities. In the economic backdrop, the Caixin manufacturing purchasing managers’ index posted a reading of 52.0 in October, released on November 2, versus 52.1 in September and a forecast of 52.0. By contrast, the official manufacturing index fell to 49.3 in October, while the non-manufacturing index stood at 49.7 and the composite at 49.7; a Caixin report attributed manufacturing weakness to a decline in overseas Christmas orders and weak domestic consumption after the National Day holiday. The official new orders index also came in at 49.4%, down 1.1 percentage points from the previous month.